Market Snapshot – Stock Markets Rebound as Dollar Strengthens

The stock markets rebounded today as the markets slowly came to terms with the rate hike in the US and with a hawkish Fed that we saw on Wednesday. The DAX kept moving higher during the course of the day and we believe that the US stock markets would also open strong. This shows that the bullishness in the stock markets is still very much alive and well and it has been helped by the fact that the BOJ refused to talk anything about cutting off of the stimulus and this was welcomed by the Asian stock markets. We wait to see if the markets close strong for the week which would then take us to an interesting next week.

The US, Canadian and the UK central banks have sent out clear signals to the market and they have made it clear that they would act when it is required even if the economic and the political situation is not favorable in the respective countries. The Fed has sought to hike the interest rates and sound hawkish despite recent data being mixed while the BOE has said that it would also look to hike the rates if the situation so demanded and we have already seen 3 BOE members vote for a rate hike yesterday. Both these are likely to support the respective currencies in the short term.

Gold prices consolidated for most of the day today as the prices are close to a very important support region around 1248. We are likely to see a small bounce from this region towards 1260 but the overall trend seems to be very much bearish.